hi, this is another good article I found over the net and felt worth sharing. I was trying to assess the opportunity and opportunity cost of starting a business in midst the current economic slowdown. So, here we go...
How the downturn might spur entrepreneurs into action!
Yesterday I was doing an interview for the State Comptroller’s office on the state of the Venture Capital industry in Texas. I found myself going negative when I decided to play devil’s advocate and began explaining how the downturn might help Texas in the long run. Here is my thinking:
I have argued North Texas entrepreneurs (or potential entrepreneurs) are too conservative. I have complained over and over that most 20-something ‘potential entrepreneurs’ in Dallas, as opposed to their counterparts in San Francisco and Boston, look a lot more like 30-somethings. Let me explain. In San Francisco most young entrepreneurs are living WAY below their means, sharing houses/apartments and using public transportation. Their fixed costs are VERY low. Compare that with the average ‘potential entrepreneur’ living in Dallas who has a nice big house in the suburbs, a leased BMW, a wife and two kids. I get it. There is no way the 20-something ‘potential entrepreneur’ is going to risk his house, car and family to start a business that is going to fail 90% of the time. On the other hand, the average 20-something in San Francisco can fail over and over with very little impact to his way of life.
What if the downturn continues and deepens? What if we hit double-digit inflation? Maybe a new crop of 20-somethings will emerge in Dallas (and Texas as a whole) who don’t have easy access to credit (to buy houses and cars) and instead focus on building businesses. Without easy access to credit they won’t have anything to risk - everything is upside. Maybe easy credit has been the problem. Of course there is a flip-side to this argument, but that really isn’t my point. Perhaps there is a silver lining. Beyond tightening of credit markets, I suspect there will be a tightening in the job market. It isn’t hard to leave a job to start a business if you get laid off.
Finally, Texas is a very business-friendly state. As companies file Chapter 11 and reorganize, perhaps they will pick states like Texas to relocate to? For example, if Pelosi and Reed would allow GM to file Chapter 11 they could shed their expensive union contracts and move those high paying (i.e. comparable to the Toyota, Honda and BMW jobs we have in Texas) to Texas, Tennessee or South Carolina. Maybe Texas is the NET winner in this realignment?
Source: http://www.texasstartupblog.com/
